G.R. No. 193534 - Spouses Tio vs. Bank of the Philippine Islands

Goldstar Milling Corporation, engaged in rice milling and trading of corn and palay, and spouses Manuel and Evelyn Tio (majority stockholders of Goldstar) secured several loans from the Far East Bank and Trust Company (now Bank of the Philippine Islands or BPI).
To secure these loans, the parties executed various promissory notes and real estate mortgages over multiple properties, including the premises where their business and residence were located.

On June 18, 2001, BPI sent a demand letter to Goldstar and spouses Tio for the settlement of an outstanding obligation amounting to P67,791,897.15.
Upon failure to pay despite repeated demands, BPI initiated foreclosure proceedings against the mortgaged properties.
Subsequent to the foreclosure, spouses Tio filed a complaint before the Regional Trial Court (RTC) of Cauayan City, Isabela, seeking annulment of the promissory notes, real estate mortgages, and related foreclosure actions in Civil Case No. Br. 19-1083.

In February 2003, BPI filed a Petition for the Issuance of a Writ of Possession against Goldstar and spouses Tio in the RTC (SCA Case No. Br. 20-156).
The RTC issued an Order for the issuance of a Writ of Possession on August 8, 2003.
Spouses Tio, aggrieved by this order, sought relief by filing a Petition for Certiorari and Prohibition before the Court of Appeals (CA), which dismissed their petition on April 23, 2004.
Further, spouses Tio’s subsequent petition for cancellation of the Writ of Possession was denied by the RTC on October 9, 2007, a decision later reaffirmed on reconsideration in 2008.

In CA-G.R. CV No. 92580, the CA on April 28, 2010, rendered a decision denying spouses Tio’s appeal, thereby affirming the earlier RTC orders related to the foreclosure proceedings.
Spouses Tio’s Motion for Reconsideration was again denied on August 26, 2010.
In a parallel case, CA-G.R. CV No. 88638, the CA on April 29, 2010, rendered a decision affirming the RTC’s ruling in Civil Case No. Br. 19-1083—with a modification declaring the promissory notes and deeds of real estate mortgages valid.
BPI’s subsequent Motion for Reconsideration in this case was denied on October 5, 2010.

The Supreme Court consolidated the petitions (G.R. Nos. 193534 and 194091) on April 4, 2011, thereby addressing conflicting issues raised by spouses Tio and BPI.
In February 2013, following a series of negotiations, the parties entered into a Compromise Agreement.

The agreement detailed the sale of two foreclosed properties originally under Goldstar Milling Corporation (identified by Transfer Certificates of Title Nos. T-328511 and T-328512) to Sps. Jose and Lydia Morante, set at a purchase price of P40,500,000.00, with specified down payment and remaining balance conditions.
The agreement contained provisions on payment schedules, conditions precedent to the execution of a Deed of Absolute Sale, and a waiver of further claims between the parties.

The parties duly submitted necessary documents (including a Board Resolution and a Corporate Secretary’s Certificate) to support the agreement.
After due review, the Court found the Compromise Agreement proper and approved it, ordering the parties to comply with all its terms.

Whether the foreclosure proceedings, including the issuance of the Writ of Possession, were premature in light of the disputed validity of the promissory notes and related mortgage instruments.
Whether the CA erred in its conflicting rulings—one setting aside the foreclosure actions and the other upholding the validity of the promissory notes and deeds of real estate mortgages.
Whether BPI’s enforcement of the escalation clauses in the promissory notes was legally valid.
The appropriateness of cancelling the foreclosure proceedings and related measures in view of the annulment claims by spouses Tio.
Whether the Compromise Agreement entered by the parties effectively settled all outstanding claims and should constitute a binding final judgment.